Posts Tagged ‘Margin’

The book is simple, has simple concepts, and is a reasonable read for those that are starting their first business. Lots of motherhood statements, and bleeding obvious, but we all need to learn the simple lessons some how.

He does make an interesting point :
“sustainable traffic is THE source of competitive advantage on the web.”

Whilst I don’t truly believe its the only advantage, it might well be the most powerful.

Lots of the web 2.0 community success supports the focus on traffic.

I also believe reduced internal cost (and I dont mean price) is also another way to compete. Basically do something similar, but do it cheaper (sort of basic Michael Porter analysis).

I also like his ideas to opportunity models. The pictorial of a lot of ideas into a funnel, a matching criteria, and only a few opportunities out is simple, but well presented. The book positions an idea that fits as an opportunity, some of the fit characteristics included:
– personal fit
– capabilities
– interest/passion
– profitability
– scale

Whist an obvious idea, its simply over looked by many starting their first business. My advice to all new projects/business’/products is simply, if we do reasonably well – how much can we make ? The answer needs to be huge, at least some multiple of a salary.

The book also talks about a ‘money making machine’ – with strategy/operations/revenue. This is how I tend to focus new business ideas, can I mechanise large parts of the business, what are the business systems that need to support the business. I go back to strategy changes to ensure before I start, that the margins are high, and you are building a core business system. This was heavily influenced from my reading of ‘rich dad, poor dad’ books.

I start with the idea, work out margins, what business systems are needed to support the operations, mechanise, strategy to increase margins and increase automation. Then I work out how to capture the customers, and then go back to strategy, to make sure that there is a fit between margins/strategy/customer capture. Customer capture is clearly the number 1 business system. The rest is your money making machine.